Monday, February 8, 2016

Financial Market Wisdom From Bernie Madoff

OK, you're tuning in to the Madoff Channel because you know that I've seen more stock market ups and downs over more than 50 years than most folks. And, if you've navigated various updates I've made here and via my Twitter account over the last 7+ years during times of market upheaval and capitulation, you know that I've posted trade ideas with respect to individual stocks, gold, oil and bonds and 99% of my market calls have paid off handsomely for those who acted upon them.

But, since many still refer to me as Midas Madoff you want to know what I think right now, and you're busy puking up blood thanks to overdosing on the CNBC Cartoon Channel. I don't blame you. That said, and with the caveat that past performance is no guarantee of future performance, I must first insist that you look back over my postings here to better understand the process that I use to trade profitably.

For example, at the end of August, in the midst of the market meltdown, I expressed a voice of reason and for those who had balls, they bought either major stock indices when the Dow was hovering around 16,000 and/or individual names NOT in the energy sector and names that paid nice dividends and were otherwise able to withstand the upcoming recessionary cycle. I also cautioned that if the Dow closed noticeably below the 16,000 level (or if S&P closed below its equivalent long term trend line, all bets were off and there was a high risk of additional 10% decline from that 16,000 level. Now, many people refused to embrace the "R-word", but they did follow my suggestion and then watched the markets trade back up nearly 13% within a matter of weeks. Hopefully, you have been following my subsequent updates via Twitter to know that I've remained very skeptical of current equities prices--and I've argued that we had entered a likely bear market as early as Q2 of 2015...

At that same time in August, the price of oil, as expressed by WTI was in a free fall. At the time, it was in the $38 area and hedge funds were trying to talk it back up to the mid 40s. I suggested that it would be wise to wait until crude traded down towards 32, and if it traded as low as $28bbl, folks should take out mortgages on their South Florida condo's and get themselves a tanker so that you could back it up next to a refinery and fill it to the brim. Well, I know two folks who did just that and then sold it back out when March NYMEX oil futures traded back to 32 within a few days.

Now that I've established my bonafides, I'm of the opinion that despite today's bounce from being down 400+ to closing down only 180+, we haven't seen real capitulation just yet. And, now that hedge fund geniuses are publicizing being long of investment grade credit default swamps--meaning they are betting that the best corporate bonds are at risk of falling out of bed, and coupled with the fact that Fortune 500 CEOs are back in the mode of "must cut the fat and make no new investments"--that kind of shit thinking inevitably results in a recession.

There will be great buying opportunities in the upcoming several months. Keep your powder dry, do your homework and whatever you do, don't panic.

Saturday, January 30, 2016

What Bernie Madoff Thinks of ABC TV Show w Richard Dreyfuss

Now that more than 5000 visitors have come running back to my blog in the past week alone--presumably all wanting to know what I think about the melodrama "Madoff" starring Richard Dreyfuss, I'll tell you.

Firstly, when I was asked to be a co-producer for this production, I insisted that Erin Arvedlund be part of the writing team, as she is the only news journalist who actually got my whole story straight--well before anyone else. The boneheads at ABC rejected my demand, and claimed "we aren't really interested in the real story, we're more interested in making a drama that would frame [me] as a major sociopath" and otherwise appeal to the larger universe of morons who channel surf between watching Donald Trump and Megyn Kelly from FOX. They said, "Bernie, this is a numbers game, nothing else. We want to make sensationalist garbage because that's what most TV viewers are addicted to.."

Ok, I get it. Particularly the part about Megyn Kelly. Who doesn't love that new slicked-back-hair-dominatrix-porn-star look that she's embraced?!  Everyone here at Camp Butt Hole does, trust me!

The fact that the ABC show runners glossed over the fact that one single investor had agreed to fork over more than $7bil within weeks after the keystone kops at DOJ learned that Picard's forensic team discovered that the investor in question received the vast bulk of the funds placed into my firm, and was also the end recipient of more than $100mil every day into his trading accounts at GoldmanSachs and JPMorgan suggests they had no interest in the real story, and that nobody really wants to remember.

People might say that I shouldn't speak poorly of the dead, but then again, there's reason to believe that Jeff Picower isn't really dead, despite news reports about his being found at the bottom of his swimming pool soon after I turned myself in. Did ABC want to include in the script that Picower's consigliere, Bill Zabel, who 'negotiated' the return of the $7bil+ on behalf of Jeff's 'estate' after his purported passing had a son who was the #2 US Attorney in the same office that led the investigation in my firm's demise. Odd crap, right? Well, even if I applaud Irv Picard for his dogged efforts during the past 8 years, and for his recovering lots of money and redistributing it, let's face it, his firm has been paid nearly $1BIL for those services by the folks at FINRA.. Oh, should I add that breaking news suggests that Irv might be blocking efforts by plaintiffs who have been going after the Picower estate--even though his issue with the estate is long over? Sort makes one think why?

(Law360, New York (February 1, 2016, 10:35 PM ET) -- A New York federal judge on Monday ordered Bernard Madoff’s liquidation trustee to show why a group of investors trying to sue one of Madoff’s former top clients can’t include the con man’s apparent assertion that the client controlled the Ponzi scheme.)


Ok, now that two prime time shows are airing this week and then a few weeks later, let's refer to the majority of folks who invested in my firm as casualties, not victims. But I'm getting ahead of myself and veering off point. And so that the record is straight, despite the melodrama from TV script writers, the record shows that I turned myself in.

Yes, I turned myself in. The fact that my sons were given credit for reporting me to the FBI is simply because I wanted them to do that, so that they would not be suspected of knowing in advance about the fraud that was perpetrated. To be clear, they did not. Simply because they received out-sized sums of money in the form of non-recourse loans and 'bonuses' attributed to their role(s) at my brokerage firm--which was in decline for many years, does not make them complicit. They were kids, and not rocket scientists, and certainly not great with numbers. They, along with their cousin Shana (my compliance director at Madoff Securities), her husband Eric Swanson (who was an SEC enforcement director at that time, before his current rule as GC for BATS Global Trading) and a handful of other people enjoyed huge (as in Donald Trump-style 'huge') gifts and bonuses that any rational person could never have attributed to the performance of my securities brokerage firm. We were dying on the vine for years leading up to '08 thanks to equities markets becoming evermore electronic and more transparent.

But I digress. You want to know what I think of the ABC TV show. Given that I've had a first look at it, I'd say it's just another production that leverages dramatic license. It fails to tie in the assortment of stories of people who chose to turn a blind eye in favor of receiving returns on investment that no investment manager could deliver on a year-over-year basis, other than maybe Steve Cohen  over at Point72 could deliver. All of my biggest feeders and fund raisers were nothing more than cheap hookers. The fact that one of my biggest bundlers --who I paid millions to--now has is name on the front entrance to North Shore Hospital's "Trauma Center" is not the most ironic chapter in a book populated with phonies and country club types who duped themselves into believing they were 'special' and that investing in my fund made them privy to a top secret money-making formula that only very special were allowed in on. Puhlease..

There's nothing in the tv show script that points dead center at the big shots at the big banks and their blind eyes (.e.g JPMorgan and BNY). Nor does it spotlight the folks at those banks who actually raised red flags internally well before the events played out, or that those red flags were buried simply because I was generating millions of dollars for those banks via fees and commissions. What did I get them from? Toasters. That's right, JPMorgan sent me a new toaster every year for maintaining my account with them. No Knicks tickets, no taking me to fancy dinners.

I will say that in the parts where the narrative focuses on my love for my wife Baby Ruth, that is entirely true. Richard Dreyfuss can blow me if he wants to believe that I was insensitive to my boys and he can crawl up my butthole if he wants to think that I don't spend every day lamenting about their untimely deaths. If he still isn't convinced, so be it. As I've known for a long time, most people are basically shallow and stupid.

Bobby DeNiro's upcoming portrayal on HBO is not too bad. Not as bad as that new show Billions, which was great in the first episode, but has since sold-off dramatically. Just like the market sell-off that I predicted right here back in June of 2015. Despite  Billions being co-produced by Andrew Sorkin, a kid who I think is one of the brighter bulbs in the chandelier, the show protagonist's "Number 2" is so poorly characterized for being the second in command of a multi-billion hedge fund and his lines are so poorly written, I'm shocked that Sorkin didn't protest that actor and the lines he reads as if off a teleprompter. Even Dimes DiPascali would have been better in that role.

So instead of watching Dreyfuss, I'm going back to reading the script elements to a story that I think will be a blockbuster for the beach reading crowd, and could easily be turned into a great series.

Click here to go to the elements site

Last, everyone wants to know who I would endorse in the current presidential campaigns. Obviously not Donald Trump and obviously not Ted Cruz. I've been a Democrat for as long as I can remember and Chuck Schumer can vouch for that. Hillary Clinton is as close to being a modern day Machiavelli as anyone who I can think of and Bernie Sanders is a great lightening rod, but I don't think he's presidential material. He's too far to the left of the mainstream and even though we've elected an African American, I don't think this country is ready to elect a Jew as president. That said, if people can look past Mike Bloomberg's pedigree, and if decided to jump in at the last minute, he would likely make a fantastic Commander In Chief and CEO of the USA.

There, I've said it. Go read the book I recommended above. If you know a literary agent or a movie producer, you should point it out to them.


Tuesday, January 19, 2016

Palin Beds w Trump-Congress Emergency Bill to Allow Marijuana for CNN Syndrome

Not a surprise. Sarah Palin is exactly the type of tart that he appeals to and her endorsing Donald Trump, or more likely, his agreeing in advance to accept her endorsement because he's calculated 'any publicity is good publicity.' With that, there actually appears to be some sane people remaining in Congress who have finally concluded that the shit has gotten so out of control, the best solution is to enact legislation through an Emergency Bill To Legalize Marijuana For Those Suffering From CNN Syndrome.

And, of course they're right. If the American public is subjected to crazy news being force-fed to us every time they open an app or turn on the TV, and because the news only gets more crazy, the obvious result is we're all being brainwashed into a state of mass depression and confusion. The antidote for this now national mental health dilemma is already scientifically proven to be a cure. It's called Marijuana. If we have to suffer from the stupidity that is taking place in our Presidential elections, no less suffer from the craziness that is apparently taking place across the world every time we turn on CNN or log in to Google News, that suffering--which takes the form of anxiety and depression--and in turn lead to all kinds of bad outcomes, can be mitigated by self-prescribed use of marijuana.  This is a scientific fact that is based on decades of research done by think tanks across the world; most notably scientists in Israel, who are pretty well known for inventing some pretty serious stuff.

With that, I hereby call upon my old friend Chuck Schumer to immediately advance emergency legislation that has been submitted to your office this very night, and to advocate the passage of federal law that legalizes the possession and use of enough weed to get through every day in which the news is published.

Bernie Madoff

Monday, January 11, 2016

Showtime's #Billions Gets 5 Stars from Bernie

Ok, its been a while. I've been busy catching up on my reading and watching the markets move up and down thanks to the craziness of the world and the never-ending stupidity of how those crazy "hedge funds" are chasing their own tails, and pocketing those management fees. And, laughing out loud reading about Stevie Cohen pulled his latest rabbit out of the hat while watching that new series Billions on Showtime. Its a great show. Hat's off to Andrew Ross Sorkin for leading a team of writers who did a great job of channeling the personalities of all of those A-types billion dollar brats that appear on CNBC Cartoon Channel and channeling them beautifully.

Dear Andrew- If you're looking for another story you might want to produce, click on the link and read the treatment to this one-you'll like it because its based on a true story too...
 I approve of this message. 
Bernie L. Madoff

Sunday, October 18, 2015

Two Craziest Madoff Court Rulings In Same Week-Mets At Bat

First, let me send a big shout out to my long time pal Fred Wilpon, who everyone knows is the owner of the NY Mets.  I trusted in you that my favorite baseball team would once again be world famous and now that we are on deck to play in the World Series, this is the time to be offering stakes at a higher valuation. Go Mets!

Now, who would have guessed that near-on seven years later, there are still crazy and wacky cases still going through the court system, and that two of those cases would draw front page headlines in the same week. Its a Mad, Mad World!

The first case involves those smart folks over at global accounting and audit firm Ernst & Young, more affectionately known as E&Y. In that Bloomberg LP headline "Ernst & Young Confronts Madoff's Specter..
FutureSelect Portfolio Management Inc., which lost $112 million in its investment in the feeder fund, says Ernst & Young was reckless in its review. The purported assets weren’t just exaggerated; they didn’t even exist, FutureSelect says.

Ernst & Young calls its sign-off reasonable based on generally accepted auditing standards, which the firm “scrupulously” followed. The case boils down to second-guessing a review that can provide only “reasonable assurance” that a client’s financial statements are correct, the firm says.

“No audit of a Madoff-advised fund could have detected this Ponzi scheme,” Amy Call Well, an Ernst & Young spokeswoman, said in an e-mailed statement. “EY was not the auditor of any Madoff entity, we were among the many auditors of funds that chose to use Madoff as their investment adviser.”

Puhlease!!! Are you f--king kidding me?!

The next story is too classic for words, but the WSJ had a bunch of them when reporting that my old pal Noel Tucker from Fairfield Sentry won another lottery ticket this week when a Federal court judge ruled that Noel was allowed to 'break the trade' he made when he sold the $230 million claim he had filed with Irv Picard to a Cayman Island hedge fund. Noel puked on the claim and sold it for $70mil and two days later, Jeff Picower texted in the grave and told his wife to give up $7billion of the closer to $12billion that I sent his way. And that $7bil settlement made Noel's claim value go from $70mil to nearly $150mil. And the hedge fund guys were partying their brains out. Then Noel backed out of the trade before sending over the settlement documents and told the hedge fund guys to go fuck themselves. Then they sued...And guess what?

Oct. 15, 2015 1:02 p.m. ET
A bankruptcy judge agreed to undo the sale of a $230 million claim against Bernard Madoff’s liquidating investment firm, offering hopes of a higher recovery to certain Madoff investors.

Judge Stuart Bernstein of the U.S. Bankruptcy Court in Manhattan this week said he’d break off the sale of the claim, currently held by major Madoff feeder fund Fairfield Sentry Ltd. Fairfield, a British Virgin Islands fund that funneled nearly all of its investors’ cash to Mr. Madoff, had sought to undo a pending sale of the claim after a massive settlement with another of Mr. Madoff’s investors dramatically changed the playing field and drove up the price such claims were fetching on the secondary market.

In the litigation that arose over Fairfield’s bid to break off the deal with proposed buyer Farnum Place LLC, early rulings didn’t give Fairfield hope—that is, until the U.S. Second Circuit Court of Appeals weighed in. In an opinion issued last fall, the Second Circuit found that lower courts erred in declining to reconsider the sale and directed the bankruptcy court to do so.

Fairfield was granted a $230 million claim against Mr. Madoff’s investment firm, Bernard L. Madoff Investment Securities LLC, in connection with the losses its investors suffered when Mr. Madoff’s massive Ponzi scheme came to light in 2008.

Both Mr. Madoff’s firm and Fairfield went into liquidation after the fraud’s exposure.
airfield later agreed to sell that claim to Farnum Place for nearly $74 million, court papers show. Sales of such claims are common, as they help sellers get a quick payment and allow buyers to make a bet that they’ll collect more on the claim than what they pay for it.

Shortly after the claim sale was negotiated, however, a landmark $7 billion settlement with another of Mr. Madoff’s investors was reached that dramatically increased the amount of money available to repay those cheated in the fraud. As a result, trading prices for claims against Mr. Madoff’s firm soared, making the proposed sale of the Fairfield claim a potential windfall for Farnum Place but not such a good deal for Fairfield.

 Keep reading...

Monday, August 24, 2015

Stock Market Massacre: Madoff Says...

The past few days of stock market mahyem should not be (i) a surprise or (ii) a harbinger of any kind of "massacre." Then again, it depends on what your definition is when it comes to "massacre." Especially when it comes to Black Mondays. That said, the August 2015 stock market sell off will certainly be remembered...for being the type of market cycle event that was easily predicted and is typically repeated.

If you've been following "Madoff's Tweets" you know that I've been sharing the outlook of the smartest credit market and global macro folks I know during the past year; two of whom have been pointing to widening of credit spreads as being a fool-proof lead indicator of the where equity market indices will be on a 6-9 month forward looking basis. Aside, if simply because CNBC has been ranting and raving for the past year about the unicorns, the price of Tesla, and cheering the stupid over-reaching for a broad universe of stocks, you knew the writing was on the wall. Greece didn't scare you. China does...and Donald Trump should scare you more, especially when he announces that his choice of VP is Alec Baldwin.

The past week did remind me of October 1987; a crappy week, ending with a horrible Friday, and a following Monday that made every specialist on the NYSE shit the bed. The capitulation finally took place on that Tuesday morning, and then followed by markets gyrating less violently over the next few months, but generally headed higher for the next 4 years. Then there was the October crash of 1991. That blow-off came after a cycle of merger mania and culminated with the crash landing of attempted buyout of AMR.

The '94 sell-off was inspired by margin-fueled buying of Russian bonds--it was a long time ago, but that blow-off was credited to hedge fund Long Term Capital, whose bets on Rusky debt were emulated by every major bank, simply because they were all 'piggy backing' on what they thought was the best black box around.

The Internet Bubble of 2000 was simple to call. The writing was on every wall. And, even if the fall of 2008 market meltdown had Madoff's name attached to the tail leg according to the image below, we all remember that period for proving to be the washout from the financial market crapout that will go down in infamy.

What's my point? The chart to the right, which extends back to 1998 thru today, leads me to wonder whether breaking below 16,000 on the DJIA might lead to a decline down to 14,000 area. That would equate to a 20% sell-off, and a 20% sell-off brings the phrase 'recession' to mind. The fact is, when people feel poorer on paper, they don't spend as much money. No new 'Benz this year, that $20mil condo is put on hold. Restaurants suffer, etc etc. The emotional blowback that comes from 10% declines leads to tightening the belts. We call this austerity spending. And we all know what happens during austerity spending. Shit gets much worse.

16,000 is a relatively important 'level' because after it being a peak price in both 2000 and 2007, the markets roared through that level and have remained above that level for the last few years. However, charts are good indicators of where stock prices have been, not always a predictor of where stock prices will be. Bears and Bulls make money, Pigs get slaughtered.

I don't believe the world is coming to an end. I don't believe that events unfolding in China will trigger a global recession. I don't believe that oil will trade below $32 and if goes to $28, I'd recommend leasing a tanker and filling it up. If you country club types are still sitting on those energy MLPs...I wish you luck. You were sold a bill of goods when you bought them, you knew it and you were determined to throw caution to the wind.

This is a good time to buying dividend stocks that have just sold off 10%+. Its not a good time to buy Tesla stock. Its probably a great time to put in your orders for the upcoming Match Group IPO. During lousy times in the market, people want to hook up so they can get some kind of emotional and physical gratification when their financial statements are taking a toll on them.